Full steam ahead for ‘charity’ even as brakes are applied to NGOs
A high-level international symposium on charity legislation, held in Beijing this summer, underlined the Chinese government’s determination to mobilise charitable giving even as the authorities were tightening their surveillance and control of the informal NGO sector.
Some 30 foreign experts, including senior managers from non-profit regulators in Canada, the United States and the United Kingdom, met from June 12-14 with an equal number of Chinese participants who were mainly drawn from the Ministry of Civil Affairs (MOCA) and other government agencies but also included some academic researchers and foundation practitioners.
With presentations from foreign experts far outnumbering those from local participants, the event appeared to be a study exercise for the symposium hosts, the MOCA Legislative Affairs Office. Foreign experts described the legal and tax regimes in their own countries but also, according to one Chinese observer, commended the virtues of self-regulation and warned against government attempts to micro-manage the charitable sector.
Over the last two years the MOCA Legislative Affairs Office has expanded fast, adding staff, engaging in comparative studies of international charity law and making study trips overseas, with a view to drafting a comprehensive legal framework for China’s non-profit sector. However, according to sources in the Ministry, the State Council and National People’s Congress have not yet programmed time for consideration of new charity legislation, which suggests that it will be at least 2-3 years before any new law is enacted.
The MOCA Legislative Affairs Office appears to have taken the regulatory baton from the MOCA department responsible for registration and supervision of “people-established organisations” (民间组织, often loosely translated as “NGOs”), which in the past played a leading role in developing rules for “social organisations” (社会团体), “people-run non-enterprise units” (民办非企业单位) and foundations. Over the last two years the MOCA Disaster Relief Department, headed by Wang Zhenyao (王振耀), has also been pro-active in comparative studies of the charitable sector, hosting conferences to promote charity and, at the beginning of this year, establishing a China Charity and Donation Information Centre (中民慈善捐助信息中心) and website. (See earlier report.)
However, the Department and Charity and Donation Information centre were notable by their absence from this event.
A long way to go
One of the relatively few Chinese presentations to the symposium came from Xu Yongguang (徐永光) who, from 1988 to 2005, led the China Youth Development Foundation’s flagship Project Hope, which has raised more than CNY 2.5 billion (USD 320 million) in donations, mainly to support basic education.
Xu welcomed the March 2007 Law on Corporate Income Tax, which raised the permissible level of tax-deductible donations from 3% to 12% of annual profits. However, he described this as a relatively isolated piece of good news and went on to outline a number of remaining problems.
He questioned Wang Zhenyao’s estimate, made at the launch of the charity information centre earlier this year, that charitable donations in China reached CNY 10 billion (USD 1.2 billion) in 2006, amounting to just 0.5% of GDP (compared with donations in the USA worth more than 2% of GDP).
In fact, Xu argued, CNY 3.5 billion of total donations in China went to government agencies, and so could not be regarded as wholly charitable and even raised suspicions of “trading money for influence.” Other donated funds, he said came from state owned enterprises (and so did not qualify as private donations) or from international organisations and individuals. Thus, he concluded, “the actual domestic private donation to non-governmental charity organizations is CNY 3-4 billion, only about 0.2% of GDP.”
Xu went on to list five reasons for lacklustre growth of giving. First, he noted, “the government has taken too much responsibility” in all areas of social life, such that the private, charitable sector remains underdeveloped.
Secondly (and largely as a result of growing up in a society where “an omnipotent government serves as master of the people”), “the public has a weak charity awareness.”
Thirdly, private wealth is still new in China and relatively few individuals both feel financially secure and “know what is the honourable behaviour,” whilst for those who do have charitable inclinations it remains difficult to register a private foundation.
Fourthly, most charitable organisations are in “government-to-private transition with very fragile capacity for self survival and self-development,” and as a result tend to have “a not very good reputation.”
Finally, taxation policy remains generally “unfavourable.” Even the former provisions allowing tax-deductible donations of 3% of corporate profits were “not seriously implemented by local tax authorities” who are invariably keen to maximise local revenues, so it is doubtful whether the new and more generous tax relief arrangements will be effective. Moreover, Xu pointed out, only ten national-level organisations are currently eligible to receive tax-deductible donations. This, he said, depressed donations generally and is “not conducive to fair competition . . . In some ways it has [done] more harm than good” even for the organisations receiving preferential treatment.
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